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Check your milled head for piston dome and valve to head clearance. Put the head on the engine without a gasket. Secure it with a couple of bolts threaded in a few turns to serve as locating pins. Turn the engine over by hand through two complete revolutions. The head must not lift off the block at any point. 65 lb-ft of torque with thread sealant is too much. The torque spec for 7/16 grade 8 bolts is meant for clean, dry threads. This needs to be adjusted downwards for the lubricating properties of the sealant you are using. For watery red permatex or equivalent, maybe 60 lb-ft. For teflon pipe thread sealant, use 52 lb-ft. Be sure the bolt holes in the block are clean, the threads in good condition, and any blind holes are free of water/oil. Torque in the sequence given in the manual. Bring the torque up to the final value in three complete passes over all the bolts. Use something like 30, 45, 52 lb-ft. If you have access to an automotive leak-down tester, aka aircraft engine "compression tester", this would be a good time to use it. Bring #2 up to top dead center on the compression stroke, pressurize the cylinder with shop air, and check your percentage leak-down. A bad leak down -- say below 50/80 -- indicates a lack of adequate sealing. Take note of where the air is going -- some leakage past the rings is OK, but obviously you should NOT be getting air hissing out the radiator cap. You can approximate the above test with an air compressor and a rubber-nosed air gun. Bring #2 up to TDC, put the tractor in high gear with the wheels well blocked, and pressurize the cylinder through the spark plug hole with shop air. Air coming out the radiator cap is a bad thing, and you might as well find out this way and save the engine the indignity of another internal bath. When it comes time to try starting the engine again, I suggest using plain water instead of anti-freeze. Anti-freeze is a lot harder on bearings than plain water, should the same problem recur. If you test it and everything looks good, don't forget to drain the block and radiator and put the correct amount of anti-freeze in.
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